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Assessing and Managing Climate-Related Financial Risks: the Frontier of Knowledge

Assessing and Managing Climate-Related Financial Risks: the Frontier of Knowledge

(French version bellow)

The multifaceted impacts of climate change are expected to increase over time while the low-carbon transition implies deep transformation of parts of our economies. As such, financial institutions have to face these defining trends – especially on the risk side.

Meanwhile, most climate scientist and climate economists have worked on the longer term. Because these questions were not raised, little is known about the medium term (5-15 years). However, a lot of knowledge has been accumulated that could be revisited to inform questions raised from the financial sector perspective.

A workshop take place on December 16th brings together climate specialists, climate and financial economists, financiers and policymakers to examine key questions regarding climate related financial risk assessment and management.

Find out texts references and speakers presentations >> 


Alors que les discussions sur l’urgence de réduire le réchauffement climatique et les besoins de financement de la transition verte sont récurrentes, les débats concernant l’impact climatique sur les risques financiers restent embryonnaires.

Il est vrai que ce sujet peut paraître secondaire face au défi  principal de contenir la hausse des températures dans le monde à long terme.

Pourtant, à plus court terme, c’est l’ensemble du secteur financier (banques, assurances sociétés de gestion…) qui est exposé au réchauffement climatique : les banques par le bais de leurs financements d’activités énergivores, les assurances à travers la hausse des risques climatiques ou les sociétés de gestion via certains de leurs placements. Ces acteurs doivent ainsi prendre en compte les risques financiers engendrés par le réchauffement climatique

C’est justement dans ce contexte, qu’un atelier de travail se déroule le 16 décembre à l’Université Paris-Dauphine, afin de partager les connaissances et les points de vue entre spécialistes du climat, professionnels de la finance et décideurs politiques.

Retrouvez l’ensemble des textes de référence et les présentations des intervenants de cette journée spéciale ci-dessous >>


 

  • The recent Unbreakable report provides in 117 countries a measure of socioeconomic resilience, and the identification of the most promising resilience-building policies and measures, looking at options ranging from infrastructure development and land-use planning to social protection and insurance. It stresses the specific role of the financial sector, with the important role of savings products, access to credit, and insurance. The report, summary products (4 and 15 pages) and a 2-minute video that summarize the results are at gfdrr.org/unbreakable. One of the important conclusions of this work is that looking only at the impact of climate change on assets disregard most of the impact on well-being: poor people are disproportionally affected but because they own next to nothing, the impacts on them are not captured in aggregated asset loss statistics.

 

  • On the transition to a zero-carbon economy, we published last year “Decarbonizing Development – 3 steps toward a zero-carbon future.” What is particularly interesting for your audience is the discussion on how to smooth the transition and protect the losers. It deals with how to protect the poor (because we don’t want them to be affected), but also on how to manage the political economy and avoid concentrated impacts (because lobbies can block the reform, one may want to protect them, even if they don’t really deserve it…). See our policy-note (4 pages) on the matter: One of the options discussed in the report is how to minimize stranded assets by starting climate policies with approaches that influence new investments, without affecting the value of existing capital. Examples include feebate and performance standards. There is a trade-off with the efficiency and efficacy of the transition, but these approach are easier to implement from a political economic perspective. (For the most technical audience, the trade-offs with this approach are discussed in this short note).

 

PROGRAM & PRESENTATIONS 

   

9:00

Opening remarks

Anne Le Lorier (Deputy Governor, Banque de France)

Corso Bavagnoli (MD, Finance directorate, DG Trésor)

9:30

Keynote: Climate and finance –
a practitioner’s take on the research agenda

Christian Thimann (AXA, PSE)

pres_thimann

 

10:00

Keynote: What we know about the medium term impact of climate change

Valérie Masson-Delmotte (Institut Pierre-Simon-Laplace)

>pres_vmd

 

10:30

An insurer’s view of physical risks

Stéphane Pénet (FFA)

>pres_penet

 

An economist’s view of physical risks

Stéphane Hallegate (World Bank)

>pres_hallegatte

 

The macroeconomic impact of climate change

Frédéric Gonand (Université Paris Dauphine)

>pres_gonand

11:30

Coffee break

 

12:00

Stranded assets

Ben Caldecott (U. of Oxford, Smith School of Enterprise and the Environment)

>pres_caldecott

 

Policy induced transition risks

Benoit Leguet (I4CE)

>pres_leguet

 

Transition and technological risks

Patrice Geoffron (U. Paris Dauphine)

>pres_geoffron

     

14:00

Modeling the short term physical impact of climate change

Claire Souch (AgRisk)

>pres_souch

 

Modelling the firm/industry level impact of climate policies

Nina Andreeva (Cambridge Institute for Sustainability Leadership)

>pres_andreeva

14:45

Keynote: A Quant’s take on climate: Complexity, uncertainty and compounded risks

Nicole El Karoui (Institut Louis Bachelier)

>pres_elkaroui

 

15:15

Assessing climate related risks from a financial stability perspective

Dirk Schoenmaker (Bruegel & Rotterdam School of Management, Erasmus U.)

>pres_schoenmaker

 

Assessing ESG risks – a credit perspective

Robert Buhr (Société générale)

>pres_buhr

 

Assessing and pricing carbon risks

Robert Litterman (Kepos Capital)

>pres_litterman

 

Agnostic risk management

Fred Samama (Amundi)

>pres_samama

     

16 :45

A practitioner’s view (1)

Eric Vergnaud (BNP Paribas)

>pres_bnpp

 

A practitioner’s view (2)

Gaël Giraud (AFD-ILB)

 

17:15

Keynote: Climate and finance – a academics take on the research agenda

Patrick Bolton (Columbia U.)

>pres_bolton

18:00

Concluding remarks

Hans Backström (Swedish FSA)

Bertrand Villeneuve (Institut Louis Bachelier)